Save every receipt you spend money on. From now on it’s been made mandatory. The more receipts you have, the lower your tax!!!
www.businesslately.com/
www.businesslately.com/
Tuesday, March 9, 2010
Saturday, January 30, 2010
In Congress
IN CONGRESS
Return for a moment to Congress’ unfinished business on tax relief. Legislative battles over taxes will be particularly acrimonious in 2010, with the midterm congressional elections looming. Democrats will be attempting to maintain the Bush tax cuts, but only for middle and low incomers. And Obama has said 2010 is the year for tax code overhaul. With so many contentious issues already on their plate for next year, lawmakers did themselves no favors by punting on expiring breaks and the estate tax. Although Congress adopted the old slogan of the Brooklyn Dodgers and decided to wait until next year, lawmakers are certain to discover that their differences will be even harder to resolve in an election year.
JUST REMEMBER…MIRACLES HAPPEN ON ELECTION YEARS ... POLITICIANS LIVE BY THE 4 YEAR RULE: 3 FOR THEM AND 1 FOR US.
If you are fed up, let’s clean house this November.
Return for a moment to Congress’ unfinished business on tax relief. Legislative battles over taxes will be particularly acrimonious in 2010, with the midterm congressional elections looming. Democrats will be attempting to maintain the Bush tax cuts, but only for middle and low incomers. And Obama has said 2010 is the year for tax code overhaul. With so many contentious issues already on their plate for next year, lawmakers did themselves no favors by punting on expiring breaks and the estate tax. Although Congress adopted the old slogan of the Brooklyn Dodgers and decided to wait until next year, lawmakers are certain to discover that their differences will be even harder to resolve in an election year.
JUST REMEMBER…MIRACLES HAPPEN ON ELECTION YEARS ... POLITICIANS LIVE BY THE 4 YEAR RULE: 3 FOR THEM AND 1 FOR US.
If you are fed up, let’s clean house this November.
Wednesday, January 27, 2010
Payroll Taxes: Correcting Errors
PAYROLL TAXES
Firms can correct most employment tax underreporting errors interest free, according to the IRS. There are some exceptions to this rule, such as cases where the employer fails to pay the additional FICA tax due when it files Form 941-X, or when it agrees on Form 2504 to changes IRS made on audit (Rev. Rul. 2009-39).
IRS will waive estimated tax penalties due to the Making Work Pay Credit...the 6.2% credit on earned income, capped at $400 for singles and $800 for couples. IRS changed its income tax withholding tables to approximate the value of the credit. But many filers will be under withheld because the drop in income tax withholding exceeds the amount of the credit they’re entitled to. This includes working couples and pensioners with no earned income whose tax withholding was calculated under the new tables. Details on the waiver are in the instructions for Form 2210.
Firms can correct most employment tax underreporting errors interest free, according to the IRS. There are some exceptions to this rule, such as cases where the employer fails to pay the additional FICA tax due when it files Form 941-X, or when it agrees on Form 2504 to changes IRS made on audit (Rev. Rul. 2009-39).
IRS will waive estimated tax penalties due to the Making Work Pay Credit...the 6.2% credit on earned income, capped at $400 for singles and $800 for couples. IRS changed its income tax withholding tables to approximate the value of the credit. But many filers will be under withheld because the drop in income tax withholding exceeds the amount of the credit they’re entitled to. This includes working couples and pensioners with no earned income whose tax withholding was calculated under the new tables. Details on the waiver are in the instructions for Form 2210.
Gift Taxes
GIFT TAXES
When splitting a gift between individuals and charitable organizations... It’s OK to let the charities get more if IRS revalues the gift to individuals, the Tax Court says. A mother set up an LLC and gave away $907,000 worth of units in it to trusts for her kids. That used up her remaining gift tax exemption. A portion of her gift went to charities. Under the gift’s terms, if IRS found that the LLC units were worth more than she thought, the trusts were required to give the charities any amount over $907,000. On audit, IRS said the LLC units had a higher value. But no additional gift tax was due because the extra amount went to the charities. The Service balked at the formula clause, but the Court OK’d it because the trusts still got the dollar amount the mother intended (Est. of Petter, TC Memo. 2009-280).
When splitting a gift between individuals and charitable organizations... It’s OK to let the charities get more if IRS revalues the gift to individuals, the Tax Court says. A mother set up an LLC and gave away $907,000 worth of units in it to trusts for her kids. That used up her remaining gift tax exemption. A portion of her gift went to charities. Under the gift’s terms, if IRS found that the LLC units were worth more than she thought, the trusts were required to give the charities any amount over $907,000. On audit, IRS said the LLC units had a higher value. But no additional gift tax was due because the extra amount went to the charities. The Service balked at the formula clause, but the Court OK’d it because the trusts still got the dollar amount the mother intended (Est. of Petter, TC Memo. 2009-280).
Friday, January 22, 2010
Business Taxes
BUSINESS TAXES
Corporations with NOL carry backs should receive their refunds promptly, the IRS says. Even though Congress extended the five-year NOL carry back to firms with average annual gross receipts of $15 million or more, the Service says it has enough staff to turn around those refund claims in the normal 90-day period.
Corporations with NOL carry backs should receive their refunds promptly, the IRS says. Even though Congress extended the five-year NOL carry back to firms with average annual gross receipts of $15 million or more, the Service says it has enough staff to turn around those refund claims in the normal 90-day period.
Thursday, January 21, 2010
The Clergy: Tax Breaks Under Attack
THE CLERGY
Two tax breaks for members of the clergy are under attack in court. A group wants a court to void the tax exclusion for parsonage allowances and the deduction for real estate taxes and mortgage interest that is available to recipients of these allowances. In its view, preferential tax benefits for ministers that cannot be claimed by other taxpayers are unconstitutional. Seven years ago, an Appeals Court questioned the legality of the breaks in a case concerning the cap on the housing allowance, but IRS swept the issue under the rug, conceding the case after Congress tightened the cap. The current case will require the district court to uphold or nix the breaks (Freedom From Religion Found. v. Geithner, D.C., Calif.).
Two tax breaks for members of the clergy are under attack in court. A group wants a court to void the tax exclusion for parsonage allowances and the deduction for real estate taxes and mortgage interest that is available to recipients of these allowances. In its view, preferential tax benefits for ministers that cannot be claimed by other taxpayers are unconstitutional. Seven years ago, an Appeals Court questioned the legality of the breaks in a case concerning the cap on the housing allowance, but IRS swept the issue under the rug, conceding the case after Congress tightened the cap. The current case will require the district court to uphold or nix the breaks (Freedom From Religion Found. v. Geithner, D.C., Calif.).
Losses
LOSSES
A major tax break for securities traders cannot be elected retroactively, the Tax Court says. Traders who want to treat their holdings as if sold at the end of the year can claim any losses from the deemed sale as ordinary losses for tax purposes, without regard to the $3,000 annual ceiling on net capital losses. But to make an election for a year, they must do so by mid-April...the filing deadline for the previous year. A late filed election won’t fly if the trader is using hindsight to benefit from the election, in the Court’s view (Kohli, TC Memo. 2009-287).
Casualty losses on rental property aren’t passive losses, the Tax Court says. Losses from fire, storm, theft or similar events don’t count toward the $25,000 limit on deductible passive losses (Agosto, TC Summ. Op. 2009-191). On the flip side, however, any gain resulting from the insurance proceeds will not be passive income. Drinking and driving can mix for tax purposes, according to the Tax Court. A drunk driver who totaled his pickup can claim a casualty loss deduction, in its view, because his actions weren’t grossly negligent. Although he had arranged to be driven home from a party where he’d been drinking, he later thought he was OK to drive elsewhere. His vehicle slid off the road and rolled over, and he was arrested for drunken driving because his blood alcohol reading was just over the legal limit.
His insurer denied his claim because of the arrest. The Court let him deduct the loss because it said that he had tried to act reasonably (Rohrs, TC Summ. Op. 2009-190). The Court would have nixed the deduction if he had driven right home from the party with a high blood alcohol level and had an accident. That would be gross negligence.
A major tax break for securities traders cannot be elected retroactively, the Tax Court says. Traders who want to treat their holdings as if sold at the end of the year can claim any losses from the deemed sale as ordinary losses for tax purposes, without regard to the $3,000 annual ceiling on net capital losses. But to make an election for a year, they must do so by mid-April...the filing deadline for the previous year. A late filed election won’t fly if the trader is using hindsight to benefit from the election, in the Court’s view (Kohli, TC Memo. 2009-287).
Casualty losses on rental property aren’t passive losses, the Tax Court says. Losses from fire, storm, theft or similar events don’t count toward the $25,000 limit on deductible passive losses (Agosto, TC Summ. Op. 2009-191). On the flip side, however, any gain resulting from the insurance proceeds will not be passive income. Drinking and driving can mix for tax purposes, according to the Tax Court. A drunk driver who totaled his pickup can claim a casualty loss deduction, in its view, because his actions weren’t grossly negligent. Although he had arranged to be driven home from a party where he’d been drinking, he later thought he was OK to drive elsewhere. His vehicle slid off the road and rolled over, and he was arrested for drunken driving because his blood alcohol reading was just over the legal limit.
His insurer denied his claim because of the arrest. The Court let him deduct the loss because it said that he had tried to act reasonably (Rohrs, TC Summ. Op. 2009-190). The Court would have nixed the deduction if he had driven right home from the party with a high blood alcohol level and had an accident. That would be gross negligence.
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